Mario Ochoa is the co-owner and Chief Strategic Officer for Sammis & Ochoa , a San Antonio-based public relations agency. A lifelong Alamo City resident, Mario specializes in strategic planning, media relations, copywriting and looking at the glass half-full.

Note: This is an mySA.com City Brights Blog. These blogs are not written or edited by mySA or the San Antonio Express-News. The authors are solely responsible for the content.

How Blockbuster Collapsed

During my junior and senior years of college, I toiled as an employee for Blockbuster Video – then an extremely viable entity in the home entertainment market.

Like a poorly constructed film that telegraphs its ending, I still remember the day our Blockbuster district leader made a visit and uttered the following comment about a then-still burgeoning Netflix: “Have you heard of this Netflix thing? Yeah, it will never make it. People don’t want online rentals, they want something they can grab.”

The comment was innocuous, but the arrogance behind it was potent. For years Blockbuster played the role of villain in its own film about how to create a monopoly. Even as the market changed, Big Blue was just arrogant enough to think people “needed” it.

So what went wrong? How did a once-mighty leading man regress to the role of extra in its own film?

I think I know how.

Market Confusion

At the same time Netlfix was planting its roots in the ground, Blockbuster was experimenting with its membership plans without abandon. Remember the Movie Pass? How about the Game Pass? Or the limited rental Movie Pass? How about the 2 for 1 rental campaign? Maybe the 3 for 1 rental push rings a bell? Or how about the infamous “No Late Fee” campaign, which was really a ploy to dump its inventory on you when you were more than seven days late.

By the end of all the poking a prodding into our wallets, the market wasn’t just turned off by Blockbuster, it didn’t trust it anymore.

Me-too Syndrome

While Blockbuster did not enter the online market as aggressively as Netflix in the late 90s to early 2000s, it did establish a small footprint with Blockbuster Online.

The company, however, failed in one crucial area: ease of use.

While Netflix provided users with visual cues and easy-to-manage ques, Blockbuster bombarded them with sales pitches, pop ups, and worst of all, a navigation system that left users frustrated and eager to jump ship.

When the dust settled, and people began to solidify their allegiances, Netflix wasn’t just the main attraction; it made Blockbuster look like a laughably bad B-movie.

Greed

Blockbuster does not exist on movie and game rentals alone. It makes its fortune collecting late fees, and preying on impulse buyers.

Visit your local Blockbuster – if you can find one – and count the amount of non-relevant impulse items on your way to checkout. I can understand candy, popcorn, and Coke. But do we really need framed movie posters, MP3 players, children’s toys, and balloons to be shoveled down our throats? I just want to check out, thank you!

Blockbuster carried way too much inventory and paid the price. Even if it liquidates everything, it will still lose a king’s sum, and it created this mess.

In the end, Blockbuster will still exist online, at kiosks, and at a select few brick-and-mortar locations. Sadly, it didn’t have to be this way. People did not have to lose jobs, and the city did not need to lose occupied retail space.

Companies like Blockbuster go as far as the market will allow without considering its own financial future and its employees livelihood.

One thing you have to remember too with Netflix was its ability to integrate itself with video game consoles. With over 1.1 million Xbox360, PS3 and Wii consoles sold in the country all systems have integrated Netflix into their business plans. Now I can stream a movie directly to a TV via my PS3. What’s the point of ever leaving the house anymore. Netflix found a way to reach an audience that Blockbuster neglected. Although not the tipping point in them closing stores it looks like it was a factor.

Good insights Mario. But you’re wrong in your conclusions. Regardless of whether Blockbuster “won” the online war with Netflix, it would result in the same loss of jobs and occupied retail space. What would Blockbuster do with all that space? The Netflix format and delivery system would have won out whether they or Blockbuster came out on top. That’s how things go – it’s the business format that lost, not just the company.

Note: This is an mySA.com City Brights Blog. These blogs are not written or edited by mySA or the San Antonio Express-News. The authors are solely responsible for the content.